Business Directories

Wal-Mart may get customers to deliver packages

San Francisco, March 28, 2013

By Alistair Barr and Jessica Wohl

Wal-Mart Stores is considering a radical plan to have store customers deliver packages to online buyers, a new twist on speedier delivery services that the company hopes will enable it to better compete with Amazon.com.

Tapping customers to deliver goods would put the world's largest retailer squarely in middle of a new phenomenon sometimes known as "crowd-sourcing," or the "sharing economy."

A plethora of start-ups now help people make money by renting out a spare room, a car, or even a cocktail dress, and Wal-Mart would in effect be inviting people to rent out space in their vehicle and their willingness to deliver packages to others.

Such an effort would, however, face numerous legal, regulatory and privacy obstacles, and Wal-Mart executives said it was at an early planning stage.

Wal-Mart is making a big push to ship online orders directly from stores, hoping to cut transportation costs and gain an edge over Amazon and other online retailers, which have no physical store locations. Wal-Mart does this at 25 stores currently, but plans to double that to 50 this year and could expand the program to hundreds of stores in the future.

Wal-Mart currently uses carriers like FedEx Corp for delivery from stores - or, in the case of a same-day delivery service called Walmart To Go that is being tested in five metro areas, its own delivery trucks.

"I see a path to where this is crowd-sourced," Joel Anderson, chief executive of Walmart.com in the United States, said in a recent interview with Reuters.

Wal-Mart has millions of customers visiting its stores each week. Some of these shoppers could tell the retailer where they live and sign up to drop off packages for online customers who live on their route back home, Anderson explained.

Wal-Mart would offer a discount on the customers' shopping bill, effectively covering the cost of their gas in return for the delivery of packages, he added.

"This is at the brain-storming stage, but it's possible in a year or two," said Jeff McAllister, senior vice president of Walmart US innovations.

Indeed, the likelihood of this being broadly adopted across the company's network of more than 4,000 stores in the United States is low, according to Matt Nemer, a retail analyst at Wells Fargo Securities.

"I'm sure it will be a test in some stores," he added. "But they may only keep it for metro markets and for higher-priced items."

LEGAL BOUNDARIES

Start-ups such as TaskRabbit and Fiverr already let individuals rent out their time and expertise to companies and people looking for small jobs to be completed.

Zipments was founded in 2010 as a crowd-sourced delivery network that allowed anyone over 18 years old with a vehicle, a text-enabled phone, and a PayPal account to bid on courier services for local businesses.

Such online match-making businesses often push legal boundaries - and a Wal-Mart crowd-sourced delivery program would be no different, according to Nemer.

Online packages delivered by customers may never reach their destination, either through theft or fraud, the analyst said.

Such a crowd-sourced delivery service may not be as reliable as FedEx or United Parcel Service, which have insured drivers, he added.

"You are comfortable with a FedEx or UPS truck in your driveway, but what about a stranger knocking on your door?" Nemer said.

ZIPMENTS EVOLVES

While Zipments started out with a pure crowd-sourcing approach, the company now does more screening of drivers before allowing them to be part of its delivery network, chief executive and co-founder Garrick Pohl said in an interview. It now serves big cities including New York and Chicago.

Theft, fraud and late deliveries have never been a problem, but insurance and licenses were an obstacle, Pohl explained.

Drivers often need personal liability insurance to cover package delivery activities. Cargo insurance is also needed. Zipments self-insures this risk up to $250, but the firm encourages its couriers to buy additional coverage for higher-value packages, Pohl said.

In some areas, like downtown Chicago, people also need a courier license to deliver things, he added.

"Zipments now helps people get all these things set up before allowing them to deliver goods," Pohl said.

Still, he said the issues are not insurmountable, citing pizza restaurants, which have used part-time drivers to deliver pies for years.

"It's a great solution for large retailers like Wal-Mart," Pohl said. "We'd like to see them move quicker, but it's great that they are considering it."

Zipments is trying to provide such services to retailers, although Pohl declined to say which companies the start-up is talking to about this. - Reuters